New York State has a Big, Ugly Budget

Music & Politics

Volume 117, No. 5May, 2017

Late in the evening on April 7, after months of speculation, missed deadlines, a budget extender and great amounts of frustration, Governor Cuomo stepped before cameras to announce that an agreement for the fiscal year budget had been reached. The state had a budget for the 2018 fiscal year.

This was quite possibly the governor’s most difficult budget cycle since taking office. Financial uncertainty in Washington D.C., tenuous relationships with the Assembly, Senate and Mayor de Blasio, a budgetary process that allows for policy and legislation to become tied to what would otherwise be a funding debate, not to mention the governor’s own political ambitions, set the stage for a budget process that missed the fiscal year deadline, ending the governor’s seven-year streak of on-time budgets.

Among the most difficult challenges were extending the millionaire tax, addressing ethics reform, the governor’s Excelsior Scholarship proposal, real estate tax abatements, acknowledging potential federal reductions, reforming workers’ compensation, and raising the age at which individuals charged with a criminal offense are treated as adults.

At the end of the day, the governor, Senate Majority Leader John Flanagan, Assembly Speaker Carl Heastie and Independent Democratic Conference Leader Jeffrey Klein agreed to a $153.1 billion budget that caps operating budget growth at 2 percent. Yes, New York State has a budget, and it is neither as disappointing nor as “revolutionary” as some may have you believe.

New Yorkers can be forgiven for losing interest or becoming frustrated with the bickering, infighting and posturing in the capitol building in Albany. However, as has been evidenced by the recent public outcry over the Independent Democratic Conference’s expansion, New Yorkers are more aware of their local representatives than at any other time in recent memory.

Excelsior Scholarship – created

Among the most important accomplishments of the budget is the creation and funding of the Excelsior Scholarship, an initiative initially proposed by Governor Cuomo in January, which will help qualified middle-class families save up to $28,500 for a two or four-year SUNY or CUNY undergraduate degree. Though Bernie Sanders, a standard bearer of the progressive left, has hailed the Excelsior Scholarship as “revolutionary,” it is unclear how many students this will help, and if it will make a big difference for those who need access to affordable education the most – the financially needy – given that it is a “last-dollar-in” program that will only cover tuition costs after grants and scholarships are accounted for. Importantly, it will not cover fees and expenses like room and board, and it requires recipients to both live and work in New York State afterwards, factors that could mitigate the program’s overall impact. However, the Excelsior Scholarship will likely assist one-fifth of SUNY students and position New York as a progressive leader in American education. Therefore, the governor, Assembly and Senate should be applauded.

Raise-the-age – accomplished

Until now, New York was one of two states in the country that treated 16- and 17-year-olds as adults when charged with a criminal offense. Raising the age, while seemingly a simple and straightforward idea, nevertheless was extremely contentious and became the primary reason the budget was six days late. This rule change was long overdue, but not everyone is satisfied. Though most cases will be sent to family court, a considerable number of cases – including young people charged with felonies – will still be required to go to criminal court or youth court.

Ethics reform – abandoned

Ethics reform has long been a stated goal for politicians in Albany, many running on campaign platforms that place it front and center on their agenda. Calls for reform have grown especially prominent following the disbanding of the Governor’s Moreland Commission. Among the proposals discussed, representatives debated instituting term limits of eight years and limiting outside income to 15 percent of base salary, creating a voluntary public campaign finance system, lowering limits on campaign contributions, and closing the infamous limited liability loopholes.

Although throughout the negotiations, representatives on both sides of the aisle professed their commitment to the issue, no agreements were reached.

Budgetary flexibility mechanism – created

President Trump’s ascendance to the Oval Office will have many lasting effects on Americans, our country and the international community, including on New York State’s budget. With expectations that federal aid and program grants provided by Washington will be drastically cut, Governor Cuomo believed it necessary to preserve his ability to alter the state budget once the federal budget is agreed upon. In a model strikingly similar to the federal sequester of 2013, Governor Cuomo and the state legislature agreed to a mechanism that would automatically cut the state’s budget in the event that the Trump administration cut federal support by $850 million or more, and if the state legislature fails to respond within 90 days.

Millionaire tax – extended for two years

Since taking office, Governor Cuomo has met a self-imposed 2 percent growth cap on operating budgets, and this year he committed to not imposing new taxes on New Yorkers. In order to accomplish expensive priorities in education and infrastructure with these revenue constraints, there was little doubt that the millionaire tax would need to be extended. The tax, which levies an 8.82 percent tax rate on individuals making more than $1 million a year, provides $3.7 billion in state revenue.

Ride sharing services – permitted on Long Island and upstate

Ride sharing services like Uber and Lyft have fundamentally altered the transportation industry throughout the country, using strategies, technologies and standards utilized by gig-economy businesses to circumvent employment norms and employee protections. Though these companies continue to work their way through regulations and requirements in New York City, they are increasingly entrenched in the day-to-day lives of New Yorkers. These services will now be permitted on Long Island and upstate.

Affordable New York – amended and re-established

A tax abatement program called 421-a was amended and re-enacted. This affordable housing tax abatement was long favored by real-estate developers but had expired in 2016. The abatement was long a priority of the build ing trades unions and New York State AFL-CIO, which worked to ensure that labor standards were attached to any sort of tax abatement agreement. For the first time, the 421-a program, now called Affordable New York, will require developers to pay a minimum wage standard in order to qualify.

Workers’ compensation – reformed

State Senate Republicans, led by Leader John Flanagan, made workers’ compensation reform a priority for their conference. Some of their proposals included eliminating scheduled loss-of-use awards, changing the average weekly wage calculation process, eliminating the aggregate trust fund, and restricting the number of doctors that participate in workers’ compensation. These proposals were met with strong opposition by the labor community and the state AFL-CIO and were ultimately defeated. However, additional reforms were enacted that, in effect, will cut costs for employers.

Film Production Tax Credit and the Music Production Tax Credit – extended and failed, respectively

Of particular importance to musicians were the Film Production Tax Credit and the Music Production Tax Credit, both of which are designed to encourage producers and employers to create more projects and jobs in New York State, rather than outsource them across state and national borders. The film tax credit has been extraordinarily successful, creating thousands of jobs and bringing hundreds of productions to the state and the city.

The Music Production Tax Credit, which would have provided a 25 percent credit on eligible expenses to productions downstate (and 30 percent upstate) was passed overwhelmingly by the Senate and Assembly in 2016 but was vetoed by the governor late last year. Local 802 and our partners throughout the industry pushed to fully fund this credit as part of the budgetary process, but ultimately it was not included in the final budget agreement. Legislation is never easy, often taking years to accomplish, and we will continue to work with the bill sponsors to finally make the Music Production Tax Credit a reality.

The Big Ugly – living up to its name

The New York State budget agreement has long been known as the Big Ugly, both due to its size and that Albany rules allow the governor and legislators to fold in unrelated bills that had otherwise not been enacted into the budget agreement. In essence, the budget is itself a policy process, not merely a funding process.

Big Ugly 2017 was especially ugly, especially large and especially contentious due to the nature and importance of the legislative issues involved, as well as the fallout of President Trump’s election and uncertainty in Washington D.C. The Excelsior Scholarship will make New York a leader in higher education, and raising the age of defendants has brought New York closer to treating young adults charged with criminal behavior fairly. However, Albany’s inability to address ethics reform is an important indication for New Yorkers across the state and should be a warning for anyone who hopes to see a Constitutional Convention. The same rules, trends, personalities and influencers that currently control Albany will be well positioned to control the potential Constitutional Convention, and we must defeat this ballot measure in November.

In the end, this budget was indeed ugly. It contained both progressive policies and conservative priorities. It was not a resounding success, nor was it an abject failure. Yet, though it was six days late, it was worth the wait – both for what it accomplished and for what we learned.

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